Ferrous Metals

It may seem absurd at first sight to compare an icon of America’s heritage, the Harley-Davidson, with a British transplant to India from the 1940’s, but both the Harley and Enfield share at least one thing in common. Both trade on a marketing image that is soundly retro, much as Harley has tried to appeal to a younger audience, it’s old guys like me that drool over those classic lines and make up the majority of their owners.

Pool 4 Tool’s Automotive SRM Summit

The Enfield also has a decidedly retro appeal with the range being largely unchanged from the original 1940’s designs; it oozes rugged simplicity and economy. The Bullet 500 single cylinder machine is essentially the same as made by Enfield from the 1940’s in the UK before Eicher Motors, a Mumbai-listed manufacturer of engines and commercial vehicles, bought Enfield’s Indian unit in 1994 and kept the brand alive as Royal Enfield after it closed in the UK.

Modern Design, Classic Appearance

Changes such as using aluminum instead of steel for engine components and fuel injection instead of carburetors have improved the reliability and economy but not changed the appearance.

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Domestic producers AK Steel and Allegheny Technologies, Inc. are awaiting a decision by the European Commission on tariffs for grain-oriented electrical steel. According to Law 360, the provisional duties will likely be set this week and come in at 22% for the US producers.

That tariff would likely make US exports uncompetitive into European markets.

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Meanwhile, US spot M3 prices fell 8% last month on the back of continued declining domestic surcharges. GOES prices seem to have bucked the recent rise in most metals markets (exceptions include stainless steel and rare earth metals, whereas steel held steady).

No Increase

The domestic anti-dumping case has failed to provide the much- desired increase in GOES prices. Since many of the transformer and electrical power equipment manufacturers have global operations, many of them opted to modify their global supply chains to avoid potential domestic duties (which didn’t materialize anyway). Nonetheless, stacked and wound transformer core imports continue to grow:

With 24 new nuclear reactors planned in China, demand for high grade GOES continues to be high and that has led to price increases for Japanese materials. European electrical power equipment manufacturers have come into the market early to secure high-grade material regardless of the outcome of the European trade case, according to a recent TEX Report.

Demand Still Strong

This indicates to us that demand remains brisk for high-grade materials but the type of material supplied by the US domestic producers, a market in which more competition exists, may fare worse. What’s clear is that high-grade prices are on the rise but low-grade prices seem to be trading sideways.

The anti-dumping case will provide additional clues as to where domestic producers GOES’ prices will go.

What about the actual M3 GOES price this month? Click below.

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The federal government’s Highway Trust Fund is nearly dry again. Remember when we played this game last year?

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Transportation Secretary Anthony Foxx on Friday said, “we ought to be embarrassed as a country” about the state of the nation’s infrastructure, as lawmakers once again scramble to beat a May 31 deadline for extending federal transportation funds.

A Patch for the Patch

Lawmakers have talked about passing a $10 billion patch to extend transportation funding until the end of the year, but Foxx said temporary extensions are not sufficient enough to address the nation’s infrastructure needs.

“We ought to be embarrassed as a country,” he said after an appearance at a Washington, D.C., Metrorail subway station in Northern Virginia.

Foxx has a point as last year’s fix for hundreds of millions of dollars in highway, bridge and public works projects was supposed to give lawmakers time to come up with a comprehensive solution to funding the steel, concrete and underground pipe and tunnel work necessary to ensure safety of our rapidly aging infrastructure. The Highway Trust Fund is currently funded only by gas taxes and a user fee that hasn’t been adjusted since 1993. The fund runs out of money on May 31.

Manufacturers Urge Long-Term Fix

Dennis Slater, president of the Association of Equipment Manufacturers, recently wrote in a Milwaukee Journal-Sentinel Op-Ed that, “the cycle of short-term fixes already is damaging our economy. States already have pulled back on hundreds of millions of dollars’ worth of investment amid uncertainty over whether Congress will pay its trust fund tab. That hurts job creation right here in Wisconsin, among our state’s many manufacturers, contractors and workers in related industries.”

Slater and AEM urged Congressman Paul Ryan, chairman of the influential House Ways and Means committee, to push for a 5-year, fully funded fix for the trust fund rather than another short-term extension.

“Ryan has begun to float a short-term extension to buy himself more time to craft comprehensive tax reform legislation — a laudable goal — which he says would account for highway investments,” Slater wrote. “But the safety of America’s roads and bridges shouldn’t depend on the fate of tax reform, which faces an arduous path forward on Capitol Hill.”

Congress has three weeks to act.

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More first quarter results today in MetalCrawler and, as with other steel companies, ArcelorMittal’s are not good.

ArcelorMittal Loss Widens

The world’s biggest steelmaker, based in Luxembourg, said last week that its first-quarter net loss widened to $728 million from $205 million a year earlier. Revenue fell 13% to $17.12 billion.

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Sales declined 8.6% sequentially due to lower steel selling prices, seasonally lower market-priced iron ore shipments and lower iron ore prices, partly offset by increased steel shipments. Total steel shipments for the quarter were 21.6 million metric tons compared with 21 million metric tons in the year-ago quarter.

More Middle East Aluminum

Saudi Arabian Mining Co. (Ma’aden) said a massive smelter run jointly with Alcoa, Inc. will produce above its initial capacity target this year.

The Ma’aden smelter started commercial operations last year after facing problems during the start-up phase.

Ma’aden, the Gulf’s largest miner, is currently exporting around 70 to 80% of the smelter’s production, Thomas Walpole, senior vice president, Aluminium, Ma’aden said at a conference in Dubai.

The smelter had an initial annual capacity of 740,000 metric tons per year, but this year it is expected to achieve a slightly higher production of 760,000 mt, Walpole said.

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Welcome back to MetalCrawler where legal disputes over who owns a riverbed and a state-of-the-art new rolling plant take center stage.

ATI Shows Off New Rolling Plant

Allegheny Technologies, Inc. put its innovative, new $1.2 billion ATI Flat-Rolled Products steel mill in Harrison Township, Pa., on display for the Pittsburgh Tribune-Review, other media and local officials last week with tours of the new facility.

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The new mill takes huge 8 1⁄2-inch thick metal slabs of specialty steel and various alloys that ATI makes, and compresses them with massive rolls into coils, plates and sheets as thin as 0.08 of an inch. When the rolling process is completed, the coils, sheets and plates are shipped for finishing to ATI plants.

Alcoa Wins Key Ruling, Riverbed ‘Not Navigable’

A North Carolina federal judge issued what could be a key ruling recently in a dispute in which aluminum giant Alcoa Inc. seeks to prove it owns the riverbed beneath four hydroelectric dams, saying the rivers weren’t navigable when the United States was born.

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Iron ore has now gained more than 29% since early April when it was trading as low as $47.08 a metric ton.

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The dramatic turnaround has been fueled in recent weeks by BHP Billiton‘s decision to slow its rate of production growth. The market has taken this as the start of greater market discipline by producers. A rebound in iron ore shipments following the end of the Chinese New Year has added to a sense that the worst is over and the bounce back has begun.

Over the past month, three of the world’s four largest seaborne iron ore producers have suggested they will make adjustments to production volumes, Rio Tinto Group being the only dissenter but Chairman Jan Du Plessis told shareholders at an annual general meeting in Perth that our share of the seaborne trade today is 20% and a decade ago it was 20%., suggesting the firm is not trying to drive competitors out of the market simply to maintain market share. That may be the case but Rio’s 20% is of a much larger pie today. The company plans to ship about 350 mt of iron ore in 2015.

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In today’s MetalCrawler update, the jobless rate fell again even as the world’s largest steelmaker, ArcelorMittal, said it might idle more US plants.

Jobless Rate Falls

The US economy added a solid 230,000 jobs in April, according to government data released Friday morning by the Bureau of Labor Statistics, a sign that the labor market is regaining its footing after taking a slide earlier this year.

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The unemployment rate fell to 5.4%, a seven-year low.

The latest numbers offer encouragement that the recent economic slowdown marks a temporary blip rather than a sign of deeper problems. Both the jobs growth in April, as well as the tick down in the unemployment rate, were almost exactly in line with market expectations.

ArcelorMittal May Close US Plants

ArcelorMittal SA said it might follow U.S. Steel Corp. in idling more American plants as it struggles to cope with a global steel glut, weak iron-ore prices and a surge of imports into the US.

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Stainless steel and nickel rebounded impressively this month, gaining 5.6% from a low of 72 in April. The monthly stainless MMI® registered a value of 76.

3-month London Metal Exchange nickel rose in April, after falling as low as $12,200 per metric ton, the lowest levels since 2009. Technically, this recent price increase is nothing to be concerned about, at least yet.

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Nickel prices fell as much as 40% from October to April so a 5.6% increase this month seems just like a normal price reaction after a significant fall.

For the first time in nine months a weaker dollar and more stable oil prices are giving some short-term momentum to commodity prices. Nickel certainly benefited from this in April, as did most of the base metals we track. If weakness in the dollar continues, nickel prices could keep rising in this second quarter but momentum will likely vanish before prices are able to make a significant move.

Demand Not Helping Prices

End market demand seems to be robust in markets such automotive and residential appliance, although it's still weak in the energy market due to low oil prices. However, a moderate growth in stainless steel demand won't likely help move prices up too much this year. Service centers have excess inventory and that is putting pressure on US mills. This glut of inventory is a big contrast from last year when lead times went above the standard, causing service centers to look for alternative sources.

As my colleague Katie Benchina Olsen pointed out recently, until service centers reduce their inventory backlogs and nickel prices start to improve, service centers will not buy, regardless of price. Service centers need to focus on getting their inventories in check before they resume anything resembling regular buying patterns. ​​However, the mills are under pressure to book capacity and that could put more pressure on prices if they are not able to think longer-term.

What This Means For Metal Buyers

Nickel prices went up this month but that should not panic nickel buyers. Prices could keep rising in the second quarter as the dollar weakens but the outlook for the balance of the year remains bearish.

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Like most of the US solar industry, I have been watching for the tipping point in silicon photovoltaic panel installation and energy costs since the early 2000s.

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It's long been-promised by proponents of renewable energy, so I was a bit skeptical in December when it was again predicted to cause a disruption taking market share away from coal and other traditional energy providers in the US market and cause mass adoption of solar as a home heating/cooling and electricity technology.

I also don't immediately buy into the ability of the EPA Clean Power Plan to convert those millions of consumers to home-based solar generation purely based on changes in law that mainly effect producers and not consumers of energy.

Classic 'Solar Tipping Points'

Some great moments in the solar tipping point so far:

  • In 2012 ThinkProgress gave us three handy charts which showed why solar "has hit a tipping point."
  • In 2011 the tipping point supposedly happened for 3rd party residential panel ownership in California, the largest adopter market state... and that did nothing for material costs or even made a speed bump in demand for the dirtier technologies.
  • Even back in 2005, silicon crystalline solar photovoltaic panel technology "hit a tipping point" to supposedly make solar a much more viable energy generation technology. 10 years ago. Yet the demand for materials has still not risen much ever since we began tracking prices in 2012.

The monthly renewables MMI® registered a value of 60 in May, a decrease of 1.6% from 61 in April. The decrease is on par with the generally flat "terse investor frown" trend the index has tracked since its inception so, while it's not disconcerting, it doesn't give great hope for prices of raw materials for silicon panels or wind turbines to rise in the short term, either.

No Increased Demand for Raw Materials

A lot of the metal inputs of these technologies are suffering their own price problems due to market gluts that have nothing to do with solar or wind adoption, particularly steel plate.

The most promising development for solar generation is that it's now cheaper than gas in 47 states, but there's no evidence that that will spur on solar adoption in a place like, say, Minnesota where it's dark much of the day and snowmelt will ruin your roof-mounted panels every winter.

Silicon, itself, is rising in both demand and price as semiconductor and energy use is definitely on the upswing in mature markets. The adoption problem continues to be the scale of the industry. Powering California, Texas, the rest of the West and Florida will not deliver the amount of panels on roofs needed for consistent power generation for utilities and grid owners to divest in backup generation technology. It also won't deliver the amount of homes and commercial businesses generating electricity necessary to push raw material prices up significantly.

Paypal, SpaceX, Cars, Why Not the Solar Tipping Point?

Enter Elon Musk, sensing a business opportunity, and this month's announcement from Tesla Motors that it's expanding its li-ion battery business to homes and commercial properties interested in using a modified version of the automaker's batteries to store solar power generated during the day for their homes' use at night. Hey guys, another tipping point!

It's true that Tesla's advance is economical, necessary and fills a major need in the market: the ability to store energy collected from the panels at night in places where daylight doesn't extend beyond 8 PM. It could also resolve the orientation battle now being waged in California between utilities and homeowners by taking a decision on where stored power goes out of utilities' hands.

Actual Renewable Materials Prices

Still, as we are cautious about the markets we cover, I will wait to see if Tesla's battery business takes off and provides a boost for silicon solar demand. We've been promised a tipping point before. Now, how about that SpaceX IPO, Elon?

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CloudDDM is currently operating 100 high-tech 3D printers running 24 hours, 7 days a week in UPS’ Global Supply Chain Solutions Campus in Louisville, Ky. CloudDDM’s founder, entrepreneur Mitch Free said just three employees: one for each of the eight-hour shifts, can oversee the entire operation. UPS handles packaging and shipping of parts and prototypes created using CloudDDM. Free said the facility can turn around orders that typically take a week to complete in 24 hours.

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“We offer a strong value proposition to design teams who need to iterate quickly, those who produce products in low volume, those who want to customize products on demand as well as the spare parts replacement market,” Free said. “Our customers require high-quality parts with structural integrity, the consumer-grade 3D printers would not be adequate for their needs. Further, our customers trust us to make sure their proprietary data and the details of their next generation product are secure.”

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